The Home Equity Theft Reporter

Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.

Saturday, March 28, 2015

Landlord, Others Agree To Cough Up $170K To Settle Housing Discrimination Allegations Of Overly-Restrictive Policies Targeting Tenants w/ Kids; Family That Initiated HUD Probe After Being Forced Out Of Home When It Complained To Management Scores $60K Payday; Other Aggrieved Families To Divvy Up $100K Fund While Feds Pocket $10K

From the U.S. Department of Justice (Washington, D.C.):

The Justice Department announced [] that Brisben Chimney Hills Limited Partnership and JRK Residential America LLC, the owners and the former manager of the Reserve apartment complex in Lenexa, Kansas, together with their named partner and agents, have agreed to pay $170,000 to settle a lawsuit alleging violations of the Fair Housing Act (FHA).

The lawsuit alleged that defendants instituted policies at the Reserve and at other properties in Kansas and Missouri that discriminated against families with children. The lawsuit also alleged that a family was forced to leave the Reserve after they complained to management about the overly-restrictive policies.

Under the proposed consent decree, which must still be approved by the U.S. District Court of Kansas, the defendants will pay $60,000 to the family that initiated the original complaint filed with the U.S. Department of Housing and Urban Development (HUD), $100,000 into a victim fund to compensate other aggrieved families and $10,000 to the United States as a civil penalty. In addition, the proposed consent decree prohibits the defendants from discriminating in the future against families with children and requires the defendants to receive training on the requirements of the FHA.

“For over twenty-five years, the Fair Housing Act has prohibited housing providers from discriminating against families with children,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “Many parents are already struggling to find affordable housing for their families, and they should not also have to face discrimination because they have children.”

“Kansas families with children deserve the right to live where they choose and to be free from housing discrimination,” said U.S. Attorney Barry R. Grissom of the District of Kansas.

The lawsuit, [...], arose from a complaint filed with HUD by a family that was living at the Reserve apartments. The owners and operators of the Reserve instituted a policy that discriminated against families with children because it unreasonably restricted the activities of children, including a policy that required that anyone under the age of 16 be physically accompanied by an adult at all times. After the family complained about the policy, their lease was not renewed and they were forced to leave the Reserve.

After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department. The United States’ complaint alleges that the defendants violated the family’s rights, that the restrictive policies discriminated against other families with children and that the defendants engaged in a pattern or practice of discrimination or denied rights protected by the FHA to a group of persons.

“Overly restrictive housing policies for families with children are illegal, and prevent them from fully enjoying the place they call home,” said HUD Assistant Secretary Gustavo Velasquez of Fair Housing and Equal Opportunity. “HUD will continue to work with the Department of Justice to take action against property owners and landlords whose policies violate the Fair Housing Act.”

Friday, March 27, 2015

State Appeals Court Belts NYC Real Estate Attorney w/ Immediate License Suspension, Subject To Possible Disbarment For Allegedly Playing Fast & Loose w/ Client Funds; Among Charges Is Accusation That He Took Out $1.76M Loan While Acting As Own Lawyer, Agent & Title Closer, Then Failed To Record Lien While Secretly Scoring Add'l $500K Mortgage

In New York City, The Real Deal (New York) reports:

Luigi Rosabianca, a prominent real estate attorney who specializes in representing ultra-high-net-worth foreign buyers, has been suspended from practicing law after a Manhattan court found there was evidence to suggest he mishandled client funds and that he refused to cooperate with an investigation.

The decision to suspend Rosabianca, reached by the Appellate Division First Department on March 12, came after four separate clients complained to the Departmental Disciplinary Committee, which handles attorney misconduct, and Rosabianca failed to respond to any of the allegations.

Most recently, in March 2014, a client claimed that Rosabianca represented him in the sale of his apartment, but Rosabianca failed to promptly remit the sale proceeds and refused to provide accounting records for the disbursement.

The year before, a mortgage company claimed that Rosabianca took out a $1.76 million mortgage while acting as his own attorney, title closer, and agent, but failed to record the mortgage and secretly obtained a separate $500,000 mortgage, forcing them into a subordinate mortgagee position.(1)

In 2011, two complaints against Rosabianca claimed that clients had trouble getting escrow funds back from him. In one case, a client’s $25,000 check bounced due to insufficient funds.(2) In another, Rosabianca took longer than promised to return $8,350. According to the Departmental Disciplinary Committee, the investigation that this complaint spurred revealed that Rosabianca had intentionally converted and misappropriated the client’s funds on multiple occasions.

Rosabianca, founder of law firm Rosabianca & Associates, was featured in a New York Magazine article last summer about foreign buyers of Manhattan real estate. “Sometimes they come in with wires,” Rosabianca told New York of his foreign clients. “Sometimes they come in with suitcases.”

The New York article, published June 29, 2014, describes him as the founder of WIRE International Realty, a brokerage that caters to foreign buyers. On Tuesday, however, Rosabianca told The Real Deal that he is no longer affiliated with WIRE, and has no management or ownership of the firm, though they formerly shared office space. He declined to comment on the court’s decision to suspend him from practicing law.

In an April 2014 press release from WIRE, Rosabianca is identified as a principal and broker of record for the firm, and is quoted as saying, “Over the past few years, WIRE International Realty has experienced great transactional success in the U.S. with Americans and foreign nationals alike.”

A cached version of his LinkedIn page also identifies him as the founder and principal of the firm. Rosabianca said that he and the firm have since parted ways.

Neither Rosabianca & Associates nor WIRE International Realty are specifically mentioned in the Appellate Division’s decision, which focuses on Rosabianca as an individual attorney.

Representatives from the Departmental Disciplinary Committee were not immediately available to comment. Rosabianca is suspended until the committee’s disciplinary proceedings are concluded, at which point it could potentially recommend to the court that he be disbarred.(3)

In February 2013, an officer with Emigrant Mortgage Company (EMC) filed a complaint with the Committee alleging that in May 2008, respondent obtained a mortgage loan from EMC in the amount of $1.76 million to refinance a prior mortgage. The loan was collateralized by two units of real property, one owned by respondent and the other owned by his parents.

Respondent acted as his own attorney, as counsel for his parents, and as title closer and agent. As title closer and agent, respondent was responsible for recording both of EMC's mortgages for which service he received a portion of the loan funds. EMC alleged that respondent failed to record both mortgages and obtained a $500,000 mortgage against the properties from another lender; as a result, EMC stated, it was forced into the position of a subordinate mortgagee.

Between March and June 2013, the Committee repeatedly requested that respondent submit a written answer to EMC's complaint, but he failed to do so. On October 15, 2013, respondent appeared for a deposition, and during that proceeding, agreed to promptly provide the Committee with a written answer to EMC's complaint. However, he failed to do so.

(2) From the court ruling:

In November 2011, the Lawyers' Fund for Client Protection (the Fund) notified the Committee that a check for $25,000 drawn against respondent's IOLA account had been dishonored due to insufficient funds. The Committee opened a sua sponte complaint and requested that respondent submit a written explanation as to why the check had been dishonored. The Committee also requested that respondent produce specified escrow account records for the six-month period immediately preceding the check at issue (May to October 2011), which he was required to maintain under the Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.15(d)(1). However, respondent failed to comply with the Committee's request.

(3)The Lawyers’ Fund For Client Protection Of the State of New York may find itself being asked by the victims to step up and cover at least some of the losses they suffered. The Lawyers' Fund was established in 1982 to provide reimbursement to law clients who have lost money or property as a result of a New York lawyer's dishonest conduct in the practice of law. The Lawyers' Fund is a remedy for law clients who cannot get reimbursement from the New York lawyer who caused the loss, or from insurance or other sources.

According to the Fund, "typical losses covered include the theft of money from estates of dead clients; escrow funds in real property closing; settlements in personal injury actions; and money embezzled from clients in investment transactions" up to a maximum of $400,000 for each client loss. Clients must apply for reimbursement within two years after they discover their loss.

For similar "attorney ripoff reimbursement funds" that cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

Thursday, March 26, 2015

Corrupt Real Estate Operator Cops To Conspiring w/ Two Others In Scheme To Hijack Title To At Least Ten Vacant, Fannie & Freddie-Owned Foreclosures, Then Flipping Them To Unwitting Buyers For $2.3M+; Feds Pinch One Escaping Co-Confederate At LAX As He Prepared To Flee To Norway

From the Office of the U.S. Attorney (San Diego, California):

Daniel Deaibes pleaded guilty [] to participating in a scheme to steal title to Southern California homes, and then to “sell” the properties to unsuspecting buyers – who later learned they had actually purchased nothing.

According to his plea agreement, between September 2012 and November 2014, when Deaibes and two alleged co-conspirators were indicted and arrested, the trio fraudulently sold or attempted to sell at least 10 homes for more than $2.3 million.

As Deaibes admitted during his guilty plea, he participated in the scheme at the direction of a co-conspirator, the owner of several real estate investment outfits. According to Deaibes’ admissions, the co-conspirator and others would record fraudulent grant deeds at county recorder’s offices, so that it would appear that the true owners of homes had deeded their properties to shell companies controlled by the co-conspirator.

Once the fraudulent documents were recorded in the chain of title, the co-schemers would pose as the new owners and immediately try to sell the properties. Deaibes said his coconspirator used aliases and a host of sham businesses to pose as the owner of properties they listed for sale, and along with Deaibes, set up bank accounts for the sham companies so that fraud proceeds could be funneled out of the scheme. In this way, the conspirators would take all the proceeds of the sale, and the true owners of the properties would get nothing.

As Deaibes admitted during his guilty plea, the schemers even took steps to thwart efforts by the true owners to regain title to the properties. In one instance, true owner Fannie Mae discovered that a fraudulent grant deed had been recorded on a property it owned in Rowland Heights, California. Shortly after discovering the fraudulent deed, Fannie Mae filed a lawsuit to recover control over the property and notify prospective buyers of the fraudulent deed.

According to Deabes’ plea agreement, he and his co-schemers created a fake “Withdrawal of Lis Pendens” in an effort to proceed with the fraudulent sale. When Fannie Mae won a judgment in its favor and obtained a court finding that the deed was fraudulent, the co-schemers created a fake “Satisfaction of Judgment” and recorded that fraudulent document as well.

Deaibes also admitted that he used the alias “John Moran” to pose as the seller’s representative in several of the fraudulent sales. He introduced himself as “Moran” and presented a fake driver’s license to two different notaries in 2014. Deaibes admitted that he signed fraudulent documents using this alias in an effort to sell or encumber properties that belonged to unsuspecting owners.

Deaibes admitted that he and the co-schemers generated more than $1.5 million in profits from the scheme. In each case, the unwitting third-party buyer paid for a house believing that Alzoubi and his co-schemers had valid title. In fact, most of these properties were actually owned by Fannie Mae and Freddie Mac -- government sponsored enterprises with a mission to provide liquidity, stability, and affordability to the United States housing and mortgage markets. As part of their mission, Fannie Mae and Freddie Mac purchase residential mortgages in the secondary market, enabling lenders to replenish their funds to finance additional single family loans. Fannie Mae and Freddie Mac can become the property owners if they own the mortgage loan at the time a home is foreclosed.

***

Deaibes and two other defendants, Mazen Alzoubi real estate investor Mohamed Daoud, were indicted in November 2014. Deaibes and Alzoubi, who were both arrested by FBI agents on November 19, 2014, were charged with mail fraud. Daoud was arrested at Los Angeles International Airport as he prepared to depart for his home country of Norway. He was charged in a related case with conspiracy to commit mail fraud and wire fraud.

A Brooklyn family that faced eviction after violating their building’s no-dog policy can keep the pup — and their pad — after convincing an administrative judge it was a therapy dog to treat depression, city documents show.

The judge recommended that the city’s Human Rights Commission wallop the building’s management firm, Prestige Management, with a $90,000 fine for trying to evict the family without seeking to confirm the legitimacy of their therapeutic claim. Doing so was a violation of the Human Rights law protecting the disabled, Judge Faye Lewis said.

The victory for Carol T., her daughter Cinnamon and their Shih Tzu named Swag came even though the pup was initially sneaked into their apartment hidden inside a baby carriage.

“Providers of housing accommodations are required to give good-faith consideration to a tenant’s request to keep a pet as a companion or emotional support animal, even if the tenant gets the pet first and asks permission later,” Lewis ruled last week.

Reps for Prestige Management pointed out the lack of any documentation of Cinnamon’s prior treatment history and a five-year gap in her mom’s therapy sessions.

CBC News: Betrayal of Trust (A CBC investigation reveals how lawyers across Canada have misappropriated and mishandled clients money, to the tune of tens of millions of dollars, or sometimes even charging vulnerable people top dollar for shoddy services)

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